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Tips for early retirment savers

28 June, 2014

It is always better to start saving for your retirement from your first job. It is easier when you start early in life. Here are a few tips for the people in their 20’s who have started to think about their last 30 years of life.

Compound interest

The power of compound interest is amazing. If you save just 2000 dollars per year from the age of 22, you would have made half a million dollars or more when you reach the age of 65. If you include your employer match, you would have made 3/4th of a million by the age of 65. To gain the same amount, you need to save 5000 dollars per year, if you start at 35. If you start at 45, you should save 12 thousand dollars per year.

Saver’s credit

If you are earning less than 30 thousand dollars per month, you can claim the saver’s credit for your retirement saving. The saver’s credit would provide you tax credit from 50% to 10%. The highest tax credit goes for the lowest earner.

Automatic withholding

You can use automatic withholding so that the money is put into the retirement account before it is put into your bank account. This would help to avoid any temptation. You would be tempted to use the money for your current needs as retirement will be far off. Remember that saving for retirement would become tougher as you grow old. The earlier you start, the easier it would be.

Start trading

The most common tip for any retirement fund would be to invest it in shares and bonds. You cannot learn to trade in just a week or month. You need to start today with small amount of money and increase your expertise in trading. This would help you to put your retirement money into the right stocks and get the best out of it. This would help you to minimize the mistake when you are using your retirement nest.